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UC takes next step with filament light bulb case: Manufacturers and ITC

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The University of California’s aggressive campaign to protect its patent on so-called “Edison” filament light bulbs has entered a new stage with a complaint filed with the U.S. International Trade Commission (ITC), seeking an investigation into the unauthorized importation of the patented technology.

After suing some large retailers, the university is now going after even bigger targets — the companies that bring the infringing products to the country.

The move comes after the first phase of the campaign was successful in recovering license fees from companies UC said had improperly used its intellectual property.

The patents in question involve the popular LED light bulbs with prominent glowing filaments, often referred to as “Edison bulbs” for their vintage look. In what UC called the first “direct patent enforcement” campaign against an entire industry, UC sued five major retailers — Amazon, Walmart, Target, Ikea, and Bed Bath & Beyond — for infringing on patents developed by a UC team led by Shuji Nakamura, who won the 2014 Nobel prize for physics.

At the time of the original lawsuits in 2019, UC also asked ITC to investigate the retailers named in the lawsuit. In this latest step, UC brought new litigation against six leading manufacturers of filament LED light products — General Electric, Savant Systems, Feit Electric, Home Depot, Ikea, and Satco Products — and asks the ITC to investigate their unauthorized import and sale of products using the UC patents.

Going after volume importers

UC took that step to go after the large volume importers of the contested products rather than individual companies selling them, as in the original litigation, says Seth D. Levy, JD, partner with the Nixon Peabody law firm in Los Angeles, CA, representing UC.

“It became clear over the course of the last year that there are a handful of companies that are major manufacturers of these products and as such they represent a huge part of the marketplace. It’s more efficient to deal with them directly than to go to after every single retailer where, for example, GE bulbs are sold,” Levy says. “This is partially an attempt to be practical in extending the campaign by addressing the manufacturers and importers directly.”

UC was encouraged to continue its aggressive enforcement because the first phase of the campaign was successful, Levy says. In response to the original litigation, UC completed 15 new licenses and several new licenses are in negotiation, he says.

“That has been the goal all along, to get licenses in place with companies that are selling or that plan to sell these products, to make sure the university is getting reasonable royalties,” Levy says. “That’s been very successful thus far in getting a healthy number of licenses done and many more in the works. I think we have a reasonable degree of confidence that with another wave of litigation becoming public, many more companies will take licenses and realize this is an ongoing effort and they have to take licenses from the university if they want to sell these products.”

Market continues growing

UC also is encouraged by the continued growth in the market for these products, Levy says. They first emerged in the past five years or so and have steadily gained in popularity. That is all good for UC as long as they receive the proper royalties. The university is not interested in stopping the production of the light bulbs but only wants to ensure they are properly licensed, he stresses.

The UC litigation is one of the few in which a university has gone to the ITC as the sole complainant, Levy adds. There have been a few cases in which universities filed complaints with the ITC that were settled quickly.

“The ITC moves very quickly. We filed a complaint in August and the investigation began in September, then we expect a trial date before next summer,” Levy reports. “That speed tends to encourage a lot of settlement and license conversations, which is what happened with the original complaint and is what we are trying to accomplish.”

UC also went to the ITC because it is difficult for a university to get injunctive relief from a district court, Levy explains. A district court may award damages but it is unlikely to prevent a company from selling the product. Of course, the university does not actually want the company to stop selling the product, but without the threat of an injunction it is difficult to get defendants to the table to discuss licensing, he says.

“The ITC only offers injunctive relief. Money damages are not the issue there,” Levy explains. “If you have a victory at the ITC, the respondent is prevented from importing infringing goods. For a market like this, where everything is manufactured overseas, that’s a very effective tool.”

If any of the defendants have refused to license with UC by the time of the trial, and if things go UC’s way, the ITC would issue “limited exclusion” and “cease and desist” orders against those companies, Levy notes. That means they would not be able to import or sell any filament LED lighting product made overseas, and they’re all made overseas.

The only exception would be if the company imports products from suppliers that have licenses with the university. So for instance, a company that previously was importing unlicensed products could switch to a different manufacturer that has struck a deal with UC. But for a company like GE or Satco, which are manufacturing the light bulbs overseas, the limited exclusion and cease and desist orders would put them out of the filament LED bulb business completely, he says.

Optimism about ITC success

Levy says the likelihood of success with this strategy is high. The patents are strong and there is now a pattern of companies licensing the IP.

“The direct enforcement of IP is the natural next step in the evolution of tech transfer, sitting alongside captive venture funds and other things that we are seeing more institutions put together. It’s another level of sophistication,” he asserts. “It’s a way to make sure that this IP we’ve spent so much time protecting, vetting, and supporting is actually valuable at the end of the day, particularly for the industries that tend not to take licenses so easily. The pharma industry tends to be very different than consumer electronics, for instance.”

More universities are exploring direct enforcement, but there still are questions about what cases are best suited for this approach, he says. The ITC may be more of an option now that UC has proven its value for enforcing patents, Levy says.

Litigation funding at work

UC’s campaign to protect the light bulb patents was made possible by litigation funding. Having outside investors fund the litigation allowed the university to go after big players in the industry instead of starting small and risking the patent troll approach, Levy says.

The Chicago-based funding firm Longford Capital is paying for legal fees and expenses, with an agreement stating that it will recoup those expenses and take a share of the proceeds from the lawsuits.

The availability of litigation funding was a key factor in deciding to proceed with the litigation, Levy says. Litigation funding levels the playing field for academic institutions, he notes, because even a large institution like UC typically does not have the kind of deep pockets typically needed for major patent litigation, he adds.

“A lot of care, thought, and effort went into this campaign before it was launched last summer, and happily it’s been going very much according to plan,” Levy says. “We’ve had some great results, and the university is happy with what we’ve accomplished thus far. We’re continuing to move head to ensure we have licenses in place with all the appropriate parties.”

Others to follow UC’s lead?

UC is smart to use the ITC in this way, says Stephen J. Weed, JD, partner with the Culhane Meadows law firm in Philadelphia. It’s an uncommon approach but he expects other universities to consider it if UC continues to see success.

“Being able to stop them at the border through the ITC procedures is a pretty strong tool in your arsenal for stopping infringers,” Weed says. “I think this will be an effective strategy for them because in this case you’re talking about a product that is being brought to the country in great quantities, and it’s a fairly simple product to identify. You ought to be able to look at it and say whether these are infringing products.”

The utility of going to the ITC will depend on the same factors that have make the move right for UC, Weed says. If the infringed products are made in the United States and/or they are not easily recognized as using the disputed patent, the ITC strategy may not be as useful, he comments.

Manufacturers versus retailers

Going after the manufacturer could have more impact than suing the retailers who sell the product, says Jeffrey B. McIntyre, JD, partner with the Oblon, McClelland, Maier & Neustadt in Alexandria, VA. UC got the attention of some big retailers with the first wave of litigation, he says, but the manufacturers may be more sensitive.

“For Amazon or Walmart, both of whom UC sued, this is one of a billion products they sell so it’s not as critical to them. But for a manufacturer that supplies them, this can be more critical,” McIntyre says. “The ITC route is helpful because manufacturers may not be as sensitive to monetary damages but they will be very concerned about an ITC order barring them from bringing their products to this country.”

UC also has support for the non-obviousness of the patent now by showing that other companies have licensed it, McIntyre notes. But he points out that there is also a risk from UC pursuing further litigation. If UC eventually loses a court or ITC decision, that could jeopardize the licenses the university already has for the patents, McIntyre explains.

“The further you go and the more you fight with a patent, it increases the chances that you may lose and lose the revenue stream you already have signed up,” he says. “It’s kind of a balancing act for how far and how aggressively they want to push it, and only they know the answer to that.”

Executing a master plan

The latest ITC move shows how serious UC is about protecting these patents, says K. Lance Anderson, JD, an attorney with Dickinson Wright in Austin, TX. “It looks like they are executing a master plan that includes the ITC proceedings,” Anderson says. “It represents another tool for patentees looking to assert their patents and looking to establish a robust licensing campaign.”

The university may be going for a snowball effect, Anderson posits, starting out last year with the litigation against retailers, the acquisition of new licenses, and the continued press with the ITC.

“Every court ruling in your favor, every license you get that shows a major company accepted your patent claims, that starts to build a more formidable case against those who are still out there infringing on your patent,” Anderson says. “You start building a more efficient licensing operation, starting to get skins on the wall and your patents are in good standing. The risk you run with going too hard too soon is that your validity might be questioned, but every success helps de-risk the vulnerabilities of your patent.”

Other universities may still be reluctant to follow UC’s path even if the university is successful with this campaign, Anderson notes. Some, particularly smaller institutions, may be afraid of scaring off industry contacts and jeopardizing relationships, he says.

Many universities have strategic relationships with particular industries that could be threatened by this kind of direct enforcement action, he observes. Upsetting industry contacts could be risky for mentoring, sponsored research, and other connections, he explains.

“For any university that’s willing to take that kind of risk, and that probably would be because they meet some of the particular criteria that’s making this work for the University of California, they’re showing you the roadmap,” he says. “It will be interesting to see how many follow them in this way.”

Contact Levy a 213-629-6161 or slevy@nixonpeabody.com; Weed at 610-416-3882 or sweed@cm.law; Anderson at 512-770-4207 or klanderson@dickinson-wright.com; and McIntyre at 703-412-6041 or jmcintyre@oblon.com.  


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